8. Form.—
No particular form is essential to a vessel mortgage except that the requisites of the Federal Statutes in regard to recording and conveyance must be observed if it is to be placed on record in the office of a collector of customs. They require that every instrument in the nature of a bill of sale or other conveyance or incumbrance of any ship or vessel, shall be duly acknowledged before a notary public or other officer authorized to take acknowledgments of deeds (7 U. S. Comp. St. §§ 7778, 7779). It should contain a copy of the last certificate of registration or enrollment. Government blank mortgages can usually be obtained at the custom house and are preferred, although any instrument following their general form will be sufficient. A bill of sale may be used, although absolute in its terms, and the fact that it is only security can be shown by parole.
Trust-deeds or mortgages securing issues of bonds are in general use where large amounts are involved. These forms are very elaborate and resemble railroad mortgages in their elaborate details. In all vessel mortgages, important provisions are those in regard to the insurance, the amount of liens which the ship may incur, the waters which she may navigate, and the rights of the mortgagee on default. It is desirable to provide for contingencies, as far as possible, by clear and definite agreements in the instruments.
To entitle a mortgage of an American vessel to an American mortgagee to the status of a "preferred mortgage" under the Ship Mortgage Act, 1920, giving its lien the superiority described in the preceding section, it is necessary that it should be recorded; that an affidavit be filed at the time of recordation to the effect that the mortgage is made in good faith and without design to hinder, delay or defraud any existing or future creditor of the mortgagor or any lienor; and that there be endorsed upon the ship's documents the names of the mortgagor and mortgagee, the time and date of the endorsement; the amount and date of the maturity of the mortgage. The formalities to be observed in the creation of "preferred mortgages" are described in detail in the Act which is printed in full in the Appendix and should be observed with scrupulous exactness.